US October phenol contract prices fell by 11%

October 31/2011

(ICIS) -- The US October phenol contract
settled at a drop of 9.23 cents/lb ($203/tonne, ?142/tonne) at 73.08Ц77.53
cents/lb FRT EQ (freight equalised), as assessed by ICIS. The drop was based
mostly on the 68 cent/gal fall in feedstock October benzene, as most US phenol
contracts are tied to benzene.

Most freely negotiated contracts also fell by 9.23 cents/lb, flat with
benzene-based formula contracts.That formula-based and freely negotiated
contracts settled flat with each other shows that the US phenol market has
softened, as freely negotiated contracts were settling at a premium to
formula-based contracts during the summer.

The biggest reason for the softness in the US phenol market has been
slower demand from most markets, as downstream buyers are looking to destock
inventory ahead of end-of-the-year taxes.Sources said they also have not
seen the typical winter holiday buildup and boost in demand, especially from
Asia.

Several US producers said they have started to adjust their operating
rates to account for the softer domestic and export demand. With producers
running full-out for much of 2011, supply is also slightly longer than normal,
sources said.